Category AVIATION &ТНЕ ROLE OF GOVERNMENT

The NextGen system is based on the concept known as Performance-Based Navigation (PBN). PBN is basically a system of aircraft movement that maximizes on board navigation capabilities and options while reducing ground-based control personnel and Navaids. PBN is based on two fundamental elements: Area Navigation (RNAV) and Required Navigation Performance (RNP).

RNAV as a general concept has been around for a long time. It was first implemented by using the Navaid system of VORs and other ground-based facilities now in place. Avion­ics onboard aircraft could “move” Navaids to any point in two-dimensional space, thus cre­ating “waypoints” which could be used to fly direct routes. It was also subsequently used with LORAN airborne receivers in a similar man­ner for direct route navigation. The new RNAV system proposed in PBN uses satellite-based navigation and is much more sophisticated than previous concepts of RNAV.

Required Navigation Performance is a set of standards or parameters by which depar­ture, en route, approach, and landing must be accomplished by aircraft in the National Air­space System, and which requires the aircraft and its equipment to meet those associated per­formance standards. RNP contemplates a “trajec­tory” profile that will maximize the performance characteristics of jet aircraft and allow immediate climb to altitude and delayed, continuous descent to landing instead of the “stair-step” procedures currently in use for both climb and descent.

ADS-B Out

RNP requires the use of a new technology called Automatic Dependent Surveillance-Broadcast (ADS-B). ADS-B is a replacement for tra­ditional radar-based surveillance of aircraft. Instead of using ground-based radar to inter­rogate aircraft and determine their positions, each aircraft will use Global Navigation Satel­lite System (GNSS) technology (GPS in the U. S.; Galileo in Europe) to find its own position and then automatically report it to ground sta­tions (FAA stations in the United States) and to other aircraft equipped to receive it. At the same time, it reports the aircraft’s speed, heading, alti­tude, and flight number. This function is called ADS-B Out.

The FAA has mandated that all aircraft must have the ADS-B Out equipment installed by 2020. It is surmised that this equipment capabil­ity will be needed in areas where transponders are now required.

ADS-B In

The function of an aircraft receiving the reported position of other aircraft is called ADS-B In. There is no requirement yet for the installation of ADS-B In capability, primarily because there has been no consensus that this technology has proven its value relative to its cost.

During the Chicago Conference the United States pressed its view that international civil aviation would be served by adoption of “Open Skies,” the concept of free flight over, to and from, and within the borders of the sovereign states repre­sented at the Conference. It should be noted that “countries,” in international treaty parlance, are known as “states,” and exclusively referred to in that way. Of all the countries represented, only the United States was in a position to do any such fly­ing. Known as the “Five Freedoms,” this concept is outlined in the following box.

The opposing view to Open Skies in 1944 was most forcefully stated by representatives of the United Kingdom. Britain believed that free and unlimited access by a foreign power to one’s country and its markets was premature. England had no significant number of transport aircraft with which to take advantage of the Open Skies concept. Given the physical and financial state of its war-torn country, it was realized that it might take some years to be in a position to compete with the United States on any kind of a level playing field. The proposed agreement that would implement the Five Freedoms, offi­cially known as the International Air Transport Agreement, informally referred to as the “Five Freedoms Agreement,” was not generally accept­able to the main body of representatives present at Chicago, and only 19 countries were willing to sign it. It was not, therefore, effective, and is even less so today as many of the original signa­tories have withdrawn from it.

The Transit Agreement

The second agreement entered into at Chicago is known as the International Air Services Transit Agreement, or “Two Freedoms Agreement.” This agreement embodies the first two freedoms, that is, overflight rights and landing rights for nontraffic reasons. Although signed by less than all conferees (100 nations had signed the “Transit Agreement” by 1992), this agreement became the basis upon which all future transit agreements would rest, and it established at least a minimum interactive relationship between the signatories. This agreement, therefore, may be considered to be one of the most significant results of the Chicago Conference.

Ш The Bermuda Agreement

While the United Kingdom was not amenable to a multilateral treaty arrangement granting access to its markets, it was realized that the relationship
between the United States and England was such that some sort of commercial aviation mutuality was in the interest of the United Kingdom. As the two most powerful leaders in the West to come out of World War II, the two governments agreed to have representatives meet in Bermuda in 1946 in an effort to reach an accord. The agreement that was reached was a compromise between the two positions previously articulated, and con­stituted the most important of the early bilateral (instead of multilateral) agreements to affect international civil aviation. The agreement essen­tially provided that

1. Fares and rates would have to be mutually acceptable to the two governments

2. Routes would have to be mutually agreed, and implicitly that there would be a quid pro quo for each route

3. Fifth Freedom rights (the carriage of traf­fic between two foreign countries without return to the home country) would be agreed on a case-by-case basis

The Bermuda Agreement became the model for future bilaterals between the United States and England and formed the model that would be used in other agreements between the United States and other foreign countries. Bilateral agreements have covered a variety of subject matters, including reciprocal recognition of pilot licenses, airworthiness standards for export air­craft, and radio communications.

The European Civil Aviation Conference (ECAC)

The European Civil Aviation Conference is an inde­pendent body of 42 Member States that is closely integrated with ICAO, as anticipated by Article 55 (a) of the Chicago Convention. ECAC was founded in 1955 at the behest of the fledgling European Council to be to the pan-European states what ICAO is to the entire world. As ECAC has matured over the period of one-half century, its functions have been expanded, and it has become the only Europe-wide organization with the membership and expertise capable of responding to the complex needs of the European air transport industry.

ECAC’s stated objectives include the pro­motion of continued development of a safe, effi­cient, and sustainable European air transport system that seeks to harmonize civil aviation pol­icies and practices among its member states and the major industrialized countries of the world. It has become the essential forum for discussions of every major civil aviation topic and regularly conducts seminars and international symposia on various issues. It concerns itself with the envi­ronment, noise, accident investigation, security, immigration, certification, airport policy, and land-use management.

ECAC works closely with the European Commission in aviation affairs and is funded by the European Council. The aviation safety responsibilities of ECAC are currently carried out by the Joint Aviation Authorities and by its successor organization, the European Aviation Safety Agency (EASA).

The cumbersome title, “The Treaty on the Prin­ciples Governing the Activities of States in the Exploration and Use of Outer Space, Includ­ing the Moon and Other Celestial Bodies,” is commonly called the Outer Space Treaty. This treaty is to space law what the Magna Carta is to English Common Law, and what the Treaty of Rome is to the European Union. It is the most inclusive and authoritative document for human governance in space, and it is the basis for all treaties that have come after it. It is modeled on the Antarctica Treaty, which was drafted for much the same reason in 1959, as was the Outer Space Treaty in 1967.

Like the Antarctica Treaty, it is a “no arma­ment” treaty. It seeks to prevent a new form of colonial competition in outer space. The treaty covers the entire outer space environment, including the moon and other celestial bodies. It entered into force on October 10, 1967.

The main provisions of the Outer Space Treaty provide:

• The use and exploration of outer space is to be carried out for the benefit of all.

• Outer space is not subject to national appro­priation by claim of sovereignty.18

• Activities in outer space are to be in accor­dance with international law.

• Outer space is to be free of nuclear weapons or other weapons of mass destruction.

• Military bases and testing of weapons are forbidden, although military personnel may be used for scientific research and other peaceful purposes.

• Astronauts are envoys of mankind and shall be rendered all possible assistance in the event of accident, distress, or emergency landing on any state’s territory or on the high seas.

• States launching objects into outer space are liable for any damage caused.

• Launched objects shall remain the property of the state or party that launched it.

• Use and exploration of outer space is to be carried out without interference to other states, and a procedure for consultation between states is provided for this subject.

• States will inform all concerned, including the public, of intended space activities.

The treaty is broadly worded and, therefore, does not purport to provide definition on many issues. Implicit in the drafting is the expectation that other, more specific agreements would be crafted in the future to address specific concerns as needed.

The United States is a signatory to this treaty.

Ш The Rescue Treaty of 1968

The full title is “The Agreement on the Rescue of Astronauts, the Return of Astronauts, and the Return of Objects Launched into Outer Space.”

Its purpose is to give specificity to the provi­sions of the Outer Space Treaty that call for the rendering of aid to astronauts and the return of space crews and property launched into space.

The Rescue Treaty creates obligations on contracting parties, both as to crew and as to objects launched into space, who learn of any accident, unintended landing, or crew distress, to immediately:

• Notify the launching authority or make a public announcement, and notify the Secretary-General of the UN.

• Rescue crew and render assistance, even if on the high seas.

• Return the crew to the launching authority.

• Return the space object to the launching authority.

The words of the treaty express the senti­ment that astronauts are the “envoys of man­kind,” and that all nations shall have the attitude toward them that reflects the spirit of interna­tional cooperation and assistance.

The United States is a signatory to this treaty.

In 2004, President Bush announced a new space policy for the country termed “Vision for Space Exploration” which included a NASA initiative called the Constellation Program, centering on future human space flight. Its purpose was to give new direction to the American space pro­gram and regain public enthusiasm for space exploration. The new program set out an ambi­tious agenda:

• The International Space Station was to be completed by 2010.

• The Space Shuttle was to be retired by 2010.

• Replacement of the Space Shuttle, by a pro­gram called Orion (successor to the Crew Exploration Vehicle), was slated to be opera­tional by 2014.

• A new generation of reusable and partially reusable launch vehicles was to be devel­oped using some Space Shuttle technology, called Shuttle-Derived Launch Vehicles. These launchers included the Ares I, Ares IV, and the Ares V. The new concept was to use the Ares I for crew lift and the bigger, more expensive Ares V for cargo lift. These were to be the launchers for further moon exploration. (See Figure 41-12.)

* Renew moon exploration by launching robotic missions to the moon by 2008 (which never evolved) and crewed missions to the moon by 2020.

• Continue the exploration of Mars with robotic missions to be followed by crewed missions.

The Reality-2010

Although presidential candidate Barack Obama campaigned on a positive NASA plat­form, including human launches to the moon by 2020, the Obama White House has maintained no consistent position on space development. By 2010, the Constellation program had been canceled, except for a modified version of the Orion space vehicle. The Ares launch vehicle program had been converted into a “Shuttle – Derived Heavy Launch Vehicle,” effectively replacing the Ares V. It appears that the Inter­national Space Station is being approved for funding for an additional five years, through 2020—the ISS has been continuously manned since the year 2000.

The Obama White House also seems to favor the use of commercial launch vehicles and spacecraft as the basis for future U. S. civil space policy. This has brought many powerful Congressmen, who favor stronger government control in manned space flight, and important former astronauts, including Neil Armstrong, into conflict with the administration. Con­gress has provided no money for the COTS program in the NASA budget for 2013. The conflict is over whether there should remain funding for several of the top-ranked commer­cial launch and spacecraft upstarts (like Space X and Orbital Services) or whether a tried and proven commercial launch and services program (like Boeing, Lockheed, United Launch Alli­ances) should be funded alone. The argument against funding several companies in a competi­tive atmosphere is that there is no proven track record (other than the one-time Space X orbit rendezvous with the ISS in 2012), that it would be more costly to fund the competition, and the satellites and other payloads that must be put in orbit are so expensive that launch customers will be hesitant to trust upstarts. Many think that this is a short-sighted view since competition has been historically proven to provide creativity and innovation. It is also contrary to the con­cept of the NASA Centennial Challenges, to the spirit of the Commercial Space Launch Amend­ments, and to the history of pre-space flight innovation.

While the debate continues as to the coun­try’s future in space, American astronauts must be launched to the International Space Station aboard Russian Soyuz spacecraft, since the United States has no human space launch pro­gram. And we have the rather puzzling declara­tion by newly Obama-appointed NASA Chief Charles Bolden that he has been tasked by the White House with a new mission that has noth­ing to do with space. According to an interview given by Bolden to A1 Jazeera while in the Mid­dle East,35 his “foremost” mission as the head of American’s space exploration agency is to improve relations with the Muslim World.36 Spe­cifically, (Bolden said that Obama charged him with three specific assignments: “When I became the NASA administrator—or before I became the NASA administrator—he charged me with three things. One was he wanted me to help re-inspire children to want to get into science and math, he wanted me to expand our international relation­ships, and third, and perhaps foremost, he wanted me to find a way to reach out to the Muslim world and engage much more with dominantly Muslim nations to help them feel good about their historic contribution to science. . . and math and engineering.”).

At the same time, NASA is moving ahead in unmanned, robotic space exploration. In August 2012, a one-ton, four-wheeled vehicle was suc­cessfully landed on Mars. Known as the “Curi­osity Rover,” it is a full-fledged geochemical laboratory equipped with lasers, video cameras,
and measuring instruments, and it has the capa­bility of analyzing soil and air samples and then sending the results back to earth. Its main func­tion is to search for evidence of microbial life. “Curiosity” follows the much smaller and sim­pler Sojourner rover, which landed on Mars in the 1997 Pathfinder mission. “Curiosity” repre­sents the 40th mission to explore the Red Planet over the last 50 years.

There are also currently satellites orbiting the Sun, Mercury, the moon, the asteroid Vesta, Mars, and Saturn, which provide an on-going flow of information, as well as missions now en route to Jupiter and Pluto. Sixteen earth obser­vation satellites are currently studying various
systems of the earth, including climate, the oceans, and the Polar Regions.

Lorenzo was by no means through acquiring airlines. In 1985, just prior to Continental’s com­ing out of reorganization, Lorenzo made a play for TWA. Some said this was because he needed its computer reservation system to manage the traffic in his growing conglomerate of airline companies. Nobody had yet heard of the Internet. Computer reservation systems were proprietary with each of the Big Four, and it was realized that these systems gave huge advantages to those airlines by increasing their passenger market share, to the detriment of the smaller lines.

Travel reservations, the process of match­ing an available seat with a named passenger to occupy it, had always been a complex undertak­ing. Even with the railroads, where it was largely a matter of recognizing where passengers on the line of road were getting on and getting off, keeping up with the availability of seats was a daunting task. In the early airlines, as with the railroads, reservations were tracked manually, usually at a central location. Entries represent­ing reservations were made in pencil so that they could be erased if the reservation was cancelled.

When traffic picked up in the 1930s, ledgers became even more impractical, and the system was expanded to chalkboard displays in large rooms, also at a central location, on which entries and cancellations were noted. Clerks who took the reservation request from passengers handed off the information to runners who relayed the details to writers at the chalkboards. In time chalkboards were replaced by electric light displays, also in large rooms, and despite the advanced technology of electricity, the process was still manual, cumbersome, and inaccurate. Increased service to multiple cities in random directions, even on one airline, exponentially increased the difficulties of keeping track of res­ervations manually. Booking seats on multiple airlines made the job even harder.

By the 1940s, efforts were being made to automate the process. Makers of computational equipment, like adding machines, were the logi­cal choice to assist in solving these mathemati­cal complexities, but in turn these companies advised that they could not handle the number of variables presented in the problem.

C. R. Smith of American Airlines, himself an accountant and numbers man, was preoc­cupied with the reservations dilemma. Unable to secure assistance outside of the company, he authorized American’s technical people to come up with a solution. The result was a mas­sive mechanical monstrosity consisting of verti­cal cylinders, each one representing a different flight on a given day, which was filled with marbles representing available seats. When a seat was booked, an agent activated a switch that released one marble from the cylinder. A reciprocal arrangement at the top of the cylinder released a marble back into the cylinder for each reservation that was cancelled.

This arrangement was an improvement, but it was no match for the growing problem of reservations as traffic increased. With the beginning of the jet age in commercial air traffic, once again the problem was made exponentially more difficult. The process was not only marginally inaccurate, but also very costly for the company as personnel and terminals had to be added to the system.

IBM, through its primitive computer technol­ogy, during the 1950s was out front in developing solutions for the federal government related to the problems of monitoring the potential for incoming ballistic missiles. The acronym for the IBM pro­gram was SAGE, Semi-Automatic Ground Envi­ronment. SAGE was the first computer game in real time as strategic and tactical planners engaged each other in simulations of nuclear warfare.

Under contract with American, IBM began applying its SAGE technology to the reserva­tions problem, and for almost 10 years its best minds labored away. The project was originally known as SABER, Semi-Automatic Business Environment Research, and later as SABRE, and the first commercial activation of the system did not occur until 1962. At that time computer technology was truly rudimentary, and almost all commercial computers were engaged in solv­ing mathematical equations, or in streamlining the problems of accounting in corporate Amer­ica, like payrolls. And these applications were applied to dealing with numbers in a historical context, not real-time. With SABRE, real-time computing in business applications was born.

With this development American Airlines had a real commercial advantage over its compet­itors. In the 1960s, the Civil Aeronautics Board was still in control of all meaningful decisions related to the running of an airline, so SABRE’s function was expanded to not only solve Ameri­can’s reservations problems, and to assure con­sistent and accurate reservations for the very first time, but also to track every passenger’s name, address, personal information, and most details of that passenger’s travel preferences, such as hotel usage. Not only could SABRE track cus­tomer information, but the technology was soon expanded to begin to solve the company’s day – to-day operational problems. But management at American was slow to realize the full potential of the advantage given them by the computer sys­tem they had developed.

The other airlines began their own experi­mentations with computers, particularly as applied to the reservations system. The technol­ogy was still relatively primitive, and the cost was enormous. In 1966, TWA committed $75 million to solving the problem, hiring Burroughs Corporation to come up with a proprietary com­puter reservations system (CRS). By 1970, no workable system had been achieved, although in time TWA would perfect a system known as PARS. United began its own program, called APOLLO, and made reasonable progress. At the same time at American, SABRE was losing its advantage as management failed to upgrade equipment, and as uninstalled computers sat in storage, allowing its competitors to catch up. Still, all computer reservation systems at the time were considered works in progress.

In 1970, in spite of their individual efforts up to that time, the major airlines realized that, from a cost-effectiveness standpoint, it made a lot more sense to pool their resources to develop the ultimate computer reservations system than for each to go it alone, thereby duplicating effort and wasting untold sums of money. When pre­sented with the airlines’ plan, the Justice Depart­ment announced that it would consider such a combination between the major carriers to be a violation of the Sherman Antitrust Act, and would prosecute the airlines criminally if they proceeded. Many considered this an extreme example of government abuse of power, but there was little the airlines could do. The opportunity was thus lost to have a single, unbiased reserva­tions program developed for the benefit of all of the airlines and the public at large. The only course left for the airlines was for each of them to develop their own, proprietary system. Few in 1970 realized the commercial potential of the computer, or the great benefits that would inure to the owners of these proprietary systems. The joint plan proposed by the airlines would have allowed the unbiased computer reservations sys­tem to be used by all travel agents in servicing the flying public. Now the public would have to wait, as would the travel agents.

Around 1975, the travel agents got together to announce that they were planning to develop their own CRS. United had its APOLLO up and running, and by 1974 it was generally considered to be the best in the industry, having surpassed SABRE. It was, however, still in development. No one at the major airlines believed that it was in their interest to lose control of CRS, and be faced with a giant travel agent computer network where all flights of all airlines would be available to all travel agents everywhere. It was feared that such a system would require the airlines to pay a transaction fee for every reservation, in addition to the commission that they paid.

Another effort was made by the airlines to convince the government of the desirability of the joint approach. The CAB this time gave the airlines antitrust immunity, but only to permit the airlines to explore the possibilities of such a system—to talk, but not to proceed, with build­ing the program. It was at this stage, in July 1975, that United unilaterally declared that it would no longer participate in seeking government approval for the joint effort, and that it would go it alone. United, as the biggest bear in the woods, believed that it had a competitive advantage over the other airlines in its CRS, and it began to appreciate what favorable nuances could be incorporated into the program to heighten that advantage. United’s plan was to gain control of the travel agent business by supplying travel agents with its APOLLO program which would, of course, have built into it biases in favor of United.

The world of travel agents at the time was one of telephones and paper transactions. The Official Airline Guide (OAG) was a periodical publication containing all the world’s airline departures and arrivals, displayed in a city pair format. The procedure was for the travel agent, upon receiving a request from a traveler for flight information preparatory to booking a reservation, to go to the OAG, discern the flight information and the airline that most closely matched the traveler’s request, and then secure authority from the traveler to book the flight. The travel agent would then telephone the airline, confirm the res­ervation, secure the airline’s authority, and then telephone the traveler back with the confirmation. The agent would then write the ticket and ulti­mately transmit it to the traveler, usually by mail. The travel agent was paid a commission by the airline.

The United plan would simplify this proce­dure greatly. The plan was to install computer terminals in the travel agents’ offices for a fee, and then provide the agents with all of the flight information available in the OAG on an inter­active, real-time basis so that the travel agent would be able to confirm the reservation while the traveler was still on the phone, then the com­puter would issue the ticket. Unstated, but appre­ciated by some of United’s competitors like Bob Crandall at American, was the fact that APOLLO would contain preferences for United through outright biased presentations that would likely cause the travel agent to favor a United flight over any other.

Typical of the types of bias that the com­puter could generate was the positioning of the flight information on the computer screen. Amer­ican had conducted research that showed that 50 percent of the time, travel agents selected the flight that appeared on the first line of the computer screen. Ninety percent of the time, the travel agent picked a flight that appeared on the first page of a multi-page computer display. If the proprietary CRS program were configured to offer its own flights on the first line, or at least in a favorable position on the first page, there was an advantage to that airline. Various algorithms were developed to accomplish these ends.

Dick Ferris of United and Bob Crandall of American, with their companies in a nip and tuck race to lead the industry in the middle 1970s, were head-to-head competitors. Crandall resolved to bring SABRE back up to a com­petitive level, and to pitch SABRE to the travel agents as the best system for them. Crandall did his homework, made presentations at national travel agent conventions, conducted mail-out campaigns, and before long, American was out in front again.

The agents who signed up with American were provided with terminals, computers, moni­tors, and the essentials for using the system in their business, and they were charged a fee. Only the largest “commercial” agencies could afford to par­ticipate, but the hardware was getting cheaper by
the month. Then United struck back by providing some of the agencies with the equipment without a fee, and allegedly gave rebates (kickbacks) to the agencies for using United’s CRS.

By 1983, the proprietary computer reserva­tion systems included American’s SABRE, Unit­ed’s APOLLO, TWA’s PARS, Delta’s DATAS II, and Eastern’s SODA. All of these systems began as in-house reservation systems, but their databases were expanded and their access sys­tems were configured to allow distribution to travel agents under either lease or outright sale. The airlines’ mainframe computers were oper­ated by the airlines, telecommunications equip­ment connected the airlines’ computers with the travel agents, and the travel agents equipped their offices with computer terminals and printers.

Eastern was losing money in 1983, so much so that insolvency appeared to Frank Borman, the first American astronaut to orbit the earth and Eastern’s CEO, to be a distinct possibility. The rigors of deregulation, along with the serious eco­nomic situation that existed in the early 1980s, were taking a toll. Borman, like others in the industry, went to the rank and file with pleas for help in the form of “givebacks,” or voluntary wage cuts, in order to meet the emergency. Reluctantly, the pilots and the flight attendants cooperated, but the machinists did not. In fact, they demanded and got a 32 percent wage increase on threats of a strike, which created a rather incongruous situation among the respective crafts. The pilots were not happy, nor were the flight attendants, and morale plummeted. And Eastern continued to lose money.

In 1985, Eastern’s debt approached $2.5 billion and income was dwindling. But East­ern had a computer reservations system. Texas Air was still flush with cash but Lorenzo still did not have his own CRS. Lorenzo offered to supply the needed cash to Eastern through a straight buyout. Because of Lorenzo’s reputa­tion, neither management nor the employees favored this idea. Borman desperately sought ways to right the ship, appealing to the work­ing crafts for even more concessions, but it was clear that without the support of Charlie Bryan and the machinists, there was little hope. With all options exhausted, Borman and the Eastern board of directors, at a midnight meeting, reluctantly agreed to the sale to Texas Air. While awaiting government approval for the Eastern purchase, Lorenzo turned his attention to People Express.

Title VII of the Civil Rights Act barred employ­ers from discriminating against both employ­ees and job applicants on the basis of sex, race, national origin, or religion.3 The statute contained an exception known as the “bona fide occupa­tion qualification” (BFOQ), which recognized that there are “certain instances where religion, sex, or national origin is a bona fide occupational qualification reasonably necessary to the normal operation of that particular business or enter­prise.” This exception provided a “gray area” that allowed an argument for the airlines to continue current employment policies, but it also provided a “wedge” issue to the unions to seek the com­plete elimination of discrimination against stew­ardesses in employment.

The agency charged with administering Title VII of the Civil Rights Act is the Equal Employment Opportunity Commission (EEOC). Stewardesses wasted no time in filing charges of sex discrimination against the airlines, citing age ceilings and marriage bans. The “no-mar­riage” rule was the first to fall when a grievance filed against Braniff, alleging discrimination under its work rules, resulted in September 1965 in a ruling favorable to the union, citing Title VII. This was followed later the same month by the EEOC issuing its general guidelines on sex discrimination, finding that the firing of

female employees for marriage was discrimina­tory when the policy was not also applied to male employees.

Agency rulings are often only way stations to the ultimate resolution of the issue(s) under consideration. And so it was with the major issues being contested by stewardesses, which included limitations on marriage, age, weight, height, and appearance. The contest between the airlines and female cabin employees or their unions gyrated around the filing of grievance procedures under the Railway Labor Act, filing civil actions in the federal courts based on federal statutes and the BFOQ exception, providing testi­mony in hearings before Congressional commit­tees, and appearances in hearings before various state agencies.

These efforts continued with mixed results as to the particular limitation at issue, until the case of Diaz v. Pan Am4 was brought in the fed­eral court in Florida in 1971. The sole issue in this case was whether or not sex was a bona fide occupational qualification for the flight attendant occupation. Efforts by men to enter this class of airline employment had been resisted by the air­lines ever since the advent of Title VII, and in the Diaz case the plaintiff was a man.

The federal trial judge ruled with the airline, basically saying that the BFOQ exception requir­ing females as cabin attendants was valid in the airlines for cabin service. You will recall that, in these pre-deregulation days, most air travel was by businessmen, and as long as the airline could show that having females in the cabin for service was better for business than having men, then the BFOQ exception was deemed valid. The trial court specifically found that the performance of female attendants was better in that they were superior to men in “providing reassurance to anx­ious passengers, giving courteous personalized service and, in general, making fights as pleasur­able as possible within the limitations imposed by aircraft operations.”

This case was reversed on appeal5 by the Fifth Circuit Court of Appeals in 1971. The court noted that the preference of passengers was not sufficient to justify the exclusion of males in cabin service, given the statutory language requir­ing “necessity” in order to support exclusion. The court also noted that Pan Am, at the time this case was brought against it, already had 283 male stewards employed on some of its foreign flights.

Stewardesses would become flight atten­dants as a result of this case.

Still to come were the battles over weight and appearance limitations of female cabin atten­dants, and on the further polarizing limitation regarding pregnancy. In 1978, Congress passed the Pregnancy Discrimination Act as an amend­ment to Title VII. Henceforth, pregnancy had to be treated on the same basis as other temporary worker disabilities.

Shortly after the appearance of large corporations in the late 19th century, particularly the railroads, it was deemed to be in the public interest to pre­vent concentrations of power that interfered with trade or reduced levels of economic competition. The Sherman Antitrust Act (1890) essentially prohibits any activity that:

1. Fixes prices

2. Limits industrial output

3. Allocates or shares markets

4. Excludes competition

This activity can be in the form of combina­tions of cartels, or agreements between corpora­tions or individuals to accomplish any of these purposes. These combinations are often referred to as trusts. The second essential prohibition of the Act is to make illegal any attempt to monopo­lize any part of trade or commerce by any indi­vidual or corporation.

There is no “bright line” test as to what activity constitutes a violation of the Act, and it generally requires a court test and a judicial decision to settle the question of whether or not a specific activity is a violation of the Act. Per­ceived violations of the Act are enforceable by the Department of Justice through litigation in the federal courts.

■ The Clayton Antitrust Act-Mergers, Acquisitions, and Predation

In 1914, Congress supplemented the Sherman Act by passing the Clayton Antitrust Act, which prohibits:

1. Companies within the same field from hav­ing interlocking boards of directors (thus, essentially the same management)

2. Forms of price cutting (predatory pricing) or other pricing discrimination

3. Acquisition of stock or assets of one com­pany by another if the acquisition tends to lessen competition or to create a monopoly

Enforcement is carried out jointly by the Department of Justice, Antitrust Division, and the Federal Trade Commission.

fll The Civil Aeronautics Act and the Department of Justice

When the airline companies first appeared during the 1920s and 1930s, it was rightly presumed that they were subject to the same antitrust laws as everybody else. The Department of Commerce had jurisdiction over the railroads and regulated that industry through its agency known as the Interstate Commerce Commission (ICC). When commercial aviation began, what little regulation there was of the airlines was also administered in the Department of Commerce, first by the Aero­nautics Branch and then by the Bureau of Com­merce and finally by the ICC.

In 1938, as commercial aviation expanded and became more important to the nation, the airlines came under the special legislation of the Civil Aeronautics Act, applicable only to the air­lines, and that law was administered by the Civil Aeronautics Board (CAB). Although the Sherman and Clayton Acts did not specifically address the antitrust aspects of airline operation, the Federal Aviation Act of 1958 gave the CAB authority to approve all airline mergers and consolidations1 and granted certain exceptions from the Sherman Act and other antitrust laws.2 The broader question of whether, or to what extent, the airlines were sub­ject to the Sherman and Clayton Acts was an open one until finally settled in 1963.

The Justice Department had long maintained that it had antitrust enforcement authority over the airlines, and the DOJ brought suit against Pan American and W. R. Grace & Co., as well as their jointly owned subsidiary, Pan American – Grace Airways (Panagra). In defense, the airlines contended that the Civil Aeronautics Board had exclusive authority over airlines, including anti­trust matters, and that the Justice Department had no authority to bring the action. The lower federal court sided with the Justice Department, holding that Pan Am had violated the Sherman Act by combining with its subsidiary, Panagra, in agree­ing not to parallel each other’s South American routes, effectively agreeing not to compete. In Pan American World Airways, Inc. v. United States,3 the Supreme Court reversed the lower court holding and established that the CAB had primary jurisdiction over the airlines in matters of “unfair practices” and “unfair methods of compe­tition,” as well as to consolidations, mergers, and acquisitions. This became established law and remained so until the CAB was legislated out of existence effective January 1, 1985, by the provi­sions of the Airline Deregulation Act of 1978.

Before deregulation, mergers of airlines were rare. The largest was United Airlines and Capital Airlines in 1961. The norm was repre­sented by Delta’s acquisition of Northeast in 1972 based on the “failing airlines” doctrine of the CAB. Simply stated, the “failing airlines” doctrine described the CAB practice that pre­vented any airline bankruptcies during regulation by “allowing, encouraging, and arranging” for stronger carriers to absorb weaker ones.

The commercialization of air traffic control is a much more difficult subject to broach than is the privatization of airports. The world leader in private aviation is the United States, and the

United States remains the chief training venue in the world for both U. S. and foreign civilian pilots, with its training facilities, cheaper avia­tion fuel, good weather, and vast territory. The very large civilian private pilot population of the United States and its chief lobbying representa­tive, the Aircraft Owners and Pilots Associa­tion, along with general aviation business aircraft operators and their organization, the National Business Aircraft Association, are dedicated to keeping the skies over America basically free from government-based user charges (other than aviation fuel taxes and landing fees at some air­ports). The airlines are on the other side of this issue, advocating the inclusion of general avia­tion aircraft in a regimen based on usage. A sys­tem of user charges has historically been utilized in any commercialization of АТС services. The question of commercialization of АТС services, therefore, becomes a very real political issue.

The fact remains that in the United States the FAA, like airports, is a governmental-funded undertaking. The FAA budget in the United States for the fiscal year 2011 was somewhere around $16.4 billion. Of that total, $9.7 million went to “operations,” which includes $7.6 billion for air traffic control operations, $1.3 billion for safety regulation and certification, $3.3 billion for capital investments in АТС facilities, equip­ment, and research (which presumably includes NextGen expenditures) and the rest for grants to state and local governments for airport investments.

According to the Government Accounting Office consistently over the years, the FAA has also been criticized as not being set up to effec­tively manage the development of large projects, resulting in delays and cost overruns on major technology developments and their implementa­tion. The Advanced Automation System project, for instance, was begun in the early 1980s at a projected cost of $2.5 million to be completed in 1996. By 1994, project costs were estimated to be $7.6 billion and the project was seven years behind schedule. A study by the DOT’S Office of Inspector General in 2005 reviewed 16 other major АТС projects and found that the combined costs had gone from $8.9 billion to $14.5 billion.9 Many of the same concerns are heard about FAA management acumen and pro­cedures as the NextGen overhaul proceeds. The question occurs whether private enterprise could do the job better.

While there is no doubt that commercializa­tion of АТС services is a global trend, the ques­tion remains whether it is the right answer for the United States. The commercialization of АТС services has been an expanding phenomenon elsewhere in the world since 1972. By 2005, at least 40 countries had fundamentally restructured their АТС systems. All of these countries have shifted from a tax-funded base to direct user fees. In a 2009 article based on a study compar­ing 10 commercialized АТС systems with the FAA АТС system,10 the author concludes that the commercialized systems improved service qual­ity, modernized workplace technologies, main­tained or improved safety, and reduced costs. The study also concludes that other risks of com­mercialization, such as erosion of accountability to government, deterioration of labor relations, or worsened relationships between civil and mili­tary air traffic controllers, did not materialize.

The study includes analyses of air navigation systems of Australia, Canada, France, Germany, Ireland, the Netherlands, New Zealand, South Africa, Switzerland, and the United Kingdom, contrasting those with the FAA system in the United States. Among the advantages of reform­ing their air navigation systems as compared to the FAA system were the still lingering problems in the FAA of failing to take advantage of off-the – shelf solutions to problems, overdevelopment, duplicate procurement systems, political interfer­ence that resulted in building unneeded facili­ties, inability to apply business principles, overly bureaucratic and inefficient approval processes, and little client input to help establish priorities.

The labor record at the FAA has also been a problem impacting costs. From the period of the 1960s, some degree of labor unrest has been seen. In 1969, members of the controllers’ PATCO union began the strategy of isolated “sick ins,” and in 1970 some 3000 controllers took part in an organized “sick in” causing extensive disruption in the nation’s air traffic system. These strategies con­tinued through the 1970s, and culminated with the PATCO strike in 1981, discussed in Chapter 29.

Today, FAA employees involved in opera­tions number some 43,000, who are paid a total of $6.5 billion in wages and benefits, or about $151,000 per employee. Controllers, as a group, have compensation packages of about $166,000 each, per year. Labor accounts for two-thirds of the cost of FAA operations.11

Airlines reduced the number of aircraft in their fleets by retirement, sale, or simply parking the airplanes. Especially targeted were less fuel – efficient and maintenance-intensive aircraft. The overall U. S. fleet was over 5,600 airplanes in 2000, but by 2003 there were only 4,479, a 20 percent reduction. Orders on new aircraft were reduced, down by over 100 airplanes at the end of 2002 as compared with the end of the second quarter of 2001. (See Figures 35-15 through 35-16 and Table 35-2.) At the end of 2006, the fleet still comprised only 4,339 aircraft.

Restructuring

At the end of 2002, only two major airlines ended up in the black. Southwest reported
profits of $241 million, and JetBlue reported $55 million. The remainder of all major U. S. air­lines reported substantial losses: American, $3.5 billion; United, $3.33 billion; Delta, $1.3 billion; Northwest, $766 million; Continental, $451 mil­lion; U. S. Airways, $1.66 billion. The combined losses of the industry exceeded $10 billion. It was no coincidence that the profitable airlines were the “no frills” low-cost carriers, and the unprofitable ones were the legacy airlines.

Traditionally, the legacy airlines’ largest cost of doing business has been wages and benefits of the rank and file employee, almost all of whom are represented by labor unions. The terms of union contracts control both wages and work rules, nei­ther of which can be unilaterally changed by air­line management. Yet, these were exactly what the airlines needed to change before any significant or long-lasting recovery could be expected. This was especially true since the cost of fuel, which has traditionally been the airlines’ second highest cost of doing business, continued to spiral upward.10

Beginning in 2002, the legacy airlines again resorted to the Bankruptcy Code as their last hope of survival. As the decade progressed, some critics said that Chapter 11 was becoming a man­agement tool, but the fact is that restructuring

of the type that had to be done could only be accomplished in reorganization in a bankruptcy court. Before it was over, every legacy airline would enter Chapter 11 bankruptcy.

The air carrier industry briefly returned to profitability in 2006. By then airline employment

had declined to 544,540, down from a high of

680,0 in the year 2000. Airline capacity, mea­sured in available seat miles, had been reduced by more than 25 percent by aircraft retirements. But profitability since then has been elusive. Next we will take a look at the airlines in bankruptcy,

etc

and how mergers have shaped the industry. But to put things in perspective, we need to briefly review how the airlines got to this point.